A Freight Invoice… you receive, pay it and administrate it. Looks straight forward right? At first sight it is, and it can be, provided that you have implemented a solid freight audit & payment solution.
A freight invoice, also called shipping invoice, freight bill or carrier's invoice, details the freight charges applicable to a shipment. Trucking companies and other freight transportation providers bill for their services using a freight invoice.
A Freight Invoice contains the following Basic invoice content
What to look for when checking a Freight Invoice?
I. Related to not accurate data on the (pdf) invoices:
1. Wrong PO number
2. Incorrect Shipper/ Carrier VAT number
3. Incorrect billing address
4. Responsible person from the Shipper’s side is not indicated (for e.g this is the requirement in P&G account)
5. Incorrect total/VAT amount (mostly in Rate check process; when incorrect amount charged on the invoice, this one to be denied/credit not to be requested)
6. Incorrect invoice date (for e.g invoice date is taken from future)
II. Related to shipment data and calculation:
1. Incorrect shipment data that led to improper calculation (origin/destination point; weight; cbm values; parcel/pallets numbers; loading date)
2. Incorrect exchange rates applied
3. Duplicated shipments included in the same / different invoices
4. Accessorial Charges - Often reference number is missing and extra charges are not reviewed by shipper
Why pay so much attention to your Freight Invoices?
In many organization there is plenty of room for process improvement in terms of invoice audit and payment. Aberdeen Group often publishes studies on this topic. They say it costs best in breed companies about $3.30 to process an invoice. That's for companies that are receiving invoices via EDI, electronically matching them, auto paying the bill. Outsourcing can bring the price down to $2.00 per processed invoice.
With this knowledge in place and the fact that Freight and Transportation account, on average, up to 15% of all revenue for a company, it’s highly recommendable to evaluate current practices.
Freight Invoice Automation features Shippers can expect
- Receive Invoices using the most efficient method possible for your organization (EDI)
- Payment can be centralized and practically be automated
- Full 24/7 invoice visibility via online platform
- Reporting/Accruals do not need to be created anymore as it is available via Business Intelligence
- Insight in the extra costs in transportation that saves customer and carrier time in its handling
- The invoice is always in the same format and always correct
- Ad-hoc shipment process more visible and more efficient via integrated online shipment booking tool
What are the results / benefits of automated Freight Invoice Audit and Payment?
- Reduction of freight cost by 3%
- Elimination of Paper invoice trails
- Automate manual handling points in the audit, coding and payment process
- Logistics Managers are only involved in exceptions via an online tool
- Reduction of time spend on rate updates, exception handling
- Cost to serve analysis via Business Intelligence
- Full visibility of processes, data and carrier performance
- Freight Audit data is a good source for benchmarking and tendering
Turn your Invoice Data into Business Intelligence
“Best practice Supply Chain managers outsource freight audit functions mainly for the reporting capabilities”
The data from the freight audit process is for many transportation and logistics departments the basis for decision-making, cost control KPI’s, and process improvement and carrier benchmarking.
When changes need to be made in order to improve transportation processes, organizations need solid and waterproof data. There are still companies that lack the (full) data resources or finding difficulties extracting clean data from multiple sources, troubling the reporting capabilities.
Primarily, there is the benefit of easily collecting some low hanging fruit. Some of the common quick wins you be around consolidating and optimizing shipping lanes.